Bell officials defended huge raises to CalPERS

LOS ANGELES 
Bell officials defended enormous salary increases to California's public pension agency as rewards for good work, and the agency decided not to challenge the hikes, according to newly revealed documents.

The California Public Employees' Retirement System learned through a routine audit in 2006 that Bell City Manager Robert Rizzo had received a 47 percent salary increase in one year and was earning up to $442,000, according to documents CalPERS released Thursday.

CalPERS also knew that the assistant city manager, Angela Spaccia, got a 42 percent pay hike and City Council members had received 38 percent raises.

CalPERS is supposed to challenge pay hikes that can lead to excessively large pensions, but it approved the raises after it received a letter from Bell's assistant city manager defending them.

Spaccia wrote that Rizzo's pay raise reflected his contributions to the small Los Angeles suburb, including resolving a multimillion-dollar deficit. She said her pay raise related to a promotion, and wrote that the City Council members "were compensated accordingly for their contributions and efforts toward the city's dramatic financial recovery."

A week later, CalPERS staff concluded that the city had provided sufficient documentation to authorize "a one-time compensation adjustment" for the officials.

Staff never notified the CalPERS board of directors about the pay increases and never conducted a follow-up audit.

Rizzo was earning nearly $800,000 a year when he, Spaccia and Bell's police chief resigned last month after a public outcry over their salaries.

Rizzo was in line for a $600,000-a-year pension but CalPERS has ordered a freeze on the benefits for all three officials pending the outcome of several investigations.

Four City Council members recently slashed their salaries of about $100,000 by 90 percent.

State Attorney General Jerry Brown, whose office is now investigating Bell salaries, said he was shocked that CalPERS didn't bring up the matter four years ago.

"A 47 percent increase in salary should have set off alarm bells," Brown said. "That kind of jump in pay is shocking and completely unacceptable. CalPERS should have told someone, and the attorney general's office would have been a good place to start."

CalPERS didn't alert authorities because "we're not part of that chain of command," spokesman Brad Pacheco said. "It was the elected city officials who negotiated, saw and signed the salaries and who are accountable."

State Treasurer Bill Lockyer, who is on the CalPERS board, plans to propose rules requiring staff to report audits that find large salary hikes to the board, spokesman Tom Dresslar said.

"There were no red flags raised for the board," said Lockyer spokesman Tom Dresslar. "That has to change."

Another board member, State Controller John Chiang, said the retirement fund should require local governments to immediately notify CalPERS of proposed salary hikes of more than a "reasonable" level, such as 10 percent, "along with a justification and the pay history for that position."